Sheffield Resources shares touch new high on $95m Northern Australia Infrastructure help for Thunderbird

Camera IconSome of the cash will be spent on site access roads and upgrading port facilities at Derby.Picture: Jakeb Waddell

Shares in Sheffield Resources hit an all-time high yesterday on news it had secured a $95 million loan from the Federal Government to help build its Thunderbird mineral sands project in the Kimberley.

The West Australian revealed yesterday the Bruce McFadzean-led company would get the 20-year loan under the Northern Australia Infrastructure Facility, its biggest investment to date.

The funding will allow Sheffield to have its own gas-fired power station, storage facilities and worker camp at Thunderbird 60km west of Derby, rather than third parties owning them under build, own and operate agreements.

The cash will also be spent on site access roads and upgrading port facilities at Derby, from where Sheffield plans to export its product.

RBC Capital Markets analyst Paul Hissey said the ability for Sheffield to own its infrastructure should result in lower operating costs than the build, own and operate model assumed by the company’s bankable feasibility study.

“We maintain a constructive view on Sheffield with the long-life, low-cost Thunderbird project well positioned in the mineral sands space,” he said.

Azure Capital partner Simon Price, who led the NAIF negotiations for Sheffield, noted the Federal Government had recently relaxed restrictions on funding under the scheme, making it more accessible.

The new rules removed a 50 per cent funding cap, allowing NAIF to fund up to 100 per cent of a project’s debt, removed a stipulation that funding could only be provided if the project was impossible without it and broadened the definition of infrastructure. Projects also had to show they would have a public benefit and an indigenous engagement strategy.

Federal Resources Minister Matt Canavan said that the Government had set up a robust and independent process to assess projects to make sure it picked those which provided major benefits for the people of northern Australia.

The $348 million Thunderbird project is expected to generate 400 jobs in construction and 280 local jobs in production with Sheffield targeting indigenous employment of 40 per cent over a 42-year mine life.

Sheffield shares surged 8.5¢, or 8 per cent, to $1.13 yesterday after touching an all-time high of $1.15.